How to calculate risk percentage

[Keith Power]

I wish to calculate the risk percentage of a trade given the open price, stop loss, balance and the lot size. I am able to get the pip difference but cant quite get the value of the pips so I can get its percentage of the balance.

Here is the example I am trying to work from:

Values:

Pair: GBPUSD
Entry Price = 1.26080;
Close/Stop loss Price = 1.26587;
Lots: 0.01

Formula:

PIPs = (Entry Price - Close Price)/0.0001;
Points Profit = Lots * 100000 * 0.0001;
Profit = PIPs * Points Profit;

The result I get from this is PIPs: 50.7 Profit: 5.07

However I should get  PIPS 50.7 Profit: 4.46

Thanks

[William Roeder]

Points Profit = 0.01 * 100000 * 0.0001;

Don't hard code constants. Do your algebra.

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin and leverage. No SL means you have infinite risk. Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce the stop goes below the support.

2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/pip but it takes account of the exchange rates of the pair vs. your account currency.)

3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
             MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum 2017.10.10
             Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum 2018.02.11
             Lot value calculation off by a factor of 100 - MQL5 programming forum 2019.07.19

4. You must normalize lots properly and check against min and max.

5. You must also check FreeMargin to avoid stop out

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

[Keith Power]

William Roeder:

Don't hard code constants. Do your algebra.

I havent written any code as of yet. I am just trying to get an understanding of the formula needed. Would you have any insight into what I might be doing wrong. It seems right but I am not getting the right answer.

Thanks

[Lorentzos Roussos]

Keith Power:

I wish to calculate the risk percentage of a trade given the open price, stop loss, balance and the lot size. I am able to get the pip difference but cant quite get the value of the pips so I can get its percentage of the balance.

You are close

Values:

Pair: GBPUSD
Entry Price = 1.26080;
Close/Stop loss Price = 1.26587;
Lots: 0.01

Formula:

PIPs = (ClosePrice-OpenPrice)/0.0001;
Points Profit = Lots * 100000 * 0.0001;
[B]Cost Per Point In The Quote Currency For Your Trade At Close Price= Lot x ContractsForOneLot x ClosePrice = 0.01 x 100000 x 1.26587 = 1,265.87 (in USD from GBPUSD);
[A]Cost Per Point In The Quote Currency For Your Trade At Open Price= Lot x ContractsForOneLot x OpenPrice = 0.01 x 100000 x 1.26080 =  1,260.8  (in USD from GBPUSD);

Profit = [B]-[A] = 1265.87 - 1260.8 = 5.07 (in USD from GBPUSD) ;

Now , when it comes to code ,our hosts have made available provisions for these types of calculations .

Such as Tick Value for one lot , trade profit ,tick size etc

[amrali]

https://www.mql5.com/en/code/28029